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Dividend Alerts issue - September 2010
15 September 2010
A Warm Welcome to all our subscribers!
What to expect from Dividend Alerts?
Ask The Editor: Is now the best time to buy shares?
CNBC interview with Robert Prechter, president of Elliott Wave International
What’s New at Early Retirement Investor.com
Dividend write-ups to be announced, in due course: Pearson Plc and Tesco Plc
First of all, as this is the very first edition of Dividend Alerts a very warm welcome to you. Invariably this first issue is going to be a rather long affair. Apologies for that!
We intend to use Dividend Alerts as our main way of communicating with you - our core group of users of Early Retirement Investor.com
First of all, we intend to inform you on a fairly regular basis, when we are about to (or have just) publish(ed) a new write-up of a dividend paying company or to notify you that we have updated a dividend write-up on a company we have written about in the past.
We will use Dividend Alerts to let you know about new initiatives on the website, news on special offers specifically geared to subscribers of Dividend Alerts, and the-like.
If you don’t mind Dividend Alerts also allows me to occasionally 'rant' about our Government’s economic policy, tax, savings, interest, pension and retirement initiatives, as well as, offer you my personal views on the state of the markets, investment strategies, etc.
So without further ado . . .
What to expect from Dividend Alerts?
I am afraid, if you are here to read about share 'tips' or making money from trading shares - buying low and selling high or going short - you are at the wrong address. You can find that kind of information in numerous other publications.
The Early Retirement Investment strategy does not include trading in shares. At least not frequently. Instead it suggest the idea of buying high-yielding shares when they are fairly-priced or even dirt cheap, and holding them for the long term, in most cases, forever.
The main aim of the Early Retirement Investment strategy is not to make a capital gain by buying and selling shares regularly, but to receive an increasing income from a company's dividend stream over the long term, that is 25 – 50 years in my book.
We regard any increase of the value of a shareholding, in any particular company over such a time period, more as a 'bonus' due to securing an increasing income.
Ask the Editor: Is now the best time to buy shares?
It all depends. While during the early part of the second half of 2009 it may have been an opportune moment to put your Early Retirement Investment strategy into place, cherry picking some solid dividend paying companies, I believe there will always be companies that fit the bill. However . . .
Will it be an even greater time to buy, say, in a couple of months?
Again it depends on your view of the economy and the stock market.
The fall in share prices in 2008/2009 had the effect of boosting dividend yields on a large number of shares to extremely attractive levels, including many of the biggest companies listed on the London stock market. This process, with regards to income yielding shares has now been reversed to a certain extent, at least, in my mind.
For example, look at British American Tobacco’s share price recent all time high (!), hitting almost £24 a share. At that price, with a prospective dividend amounting to say (a conservative?) £1.10, BAT has “just” a prospective yield of 4.6 per cent.
Still beating high street savings accounts, but not necessarily fantastic. In particular, as only 12 months ago you could easily have bought shares in BAT at around £19.50 i.e. £4.50 cheaper when they were yielding 5.1 per cent.
If you have not yet seen BAT’s five year dividend history and prospects write-up, please Click Here.
So, have we missed the “income-boat”?
Not necessarily! Even after the recent upturn in share prices, personally, I don’t expect the FTSE100 index to breach its peak of the year, that happened earlier in April. Instead, and this may or may not be controversial, I believe that we are in the middle of a rather long-term downtrend which began as far back in 2000, albeit one punctuated by bear market rallies such as the ones during 2003-07 and 2009-10.
Why am I so pessimistic?
With huge spending cuts to be announced shortly, more tax rises to be implemented/announced in the New Year and the general mood in the country worsening with strikes looming, going forward, I would not be surprised to see UK markets revisiting their lows of 2003 and 2009, mid next-year.
Of course, I may be completely wrong, and this may be the start of a major bull market . . .
However, if and when the FTSE100 index reverts to its downward trend, breaching the 2003 and 2009 lows, it may then well be worthwhile to pile into high-yielding shares. Until that moment, I will be keeping my powder dry and am happy to accumulate cash from my dividends and ISA and SIPP contributions and leave it there.
Prechter on CNBC: Market Pro: Long Bear Market Looming
Robert Prechter, president of Elliott Wave International, tells host Maria Bartiromo why he sees dark days ahead on CNBC's Closing Bell.
As the core group of users of Early Retirement Investor.com, I am particularly interested to hear your views on the website and any ideas and suggestions you may have to improve the site. This is your chance to help shape the future of our web site. Here is the link again to our feedback, ideas and suggestions page.
Sneak preview of our Investment Resources section
Our intention is to allocate a part of the Early Retirement Investor web site to high quality investment resources for savers, investors and retirees. This is very much work in progress.
If you have come across web sites you have found particularly useful as an investor, saver or retiree, I would like to invite you to let us know the names of these web sites and we'll add them to our resources and links overview.
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Dividend Alerts is an unregulated product published by EMAR Publishing, publishers of Early Retirement Investor.com
EMAR Publishing is not registered as an investment advisor or financial advisor.
We do not and will not provide personalised investment or financial advice, or individually advocate the purchase or sale of any security or investment. We publish opinionated information about the stock market and companies that we believe our subscribers may be interested in.
There is no guarantee that dividends will be paid. Figures are calculated using the closing prices. All gains are gross, and returns will be affected by dividend payments, dealing costs and taxes. Profits from share dealing are a form of income and subject to taxation. Tax treatment depends on individual circumstances and may be subject to change in the future. Editors or contributors may have an interest in shares recommended.
Past performance and forecasts are not reliable indicators of future performance. Shares are by their nature speculative and can be volatile. Your capital is at risk so you should never invest more than you can safely afford to lose.
Information in Dividend Alerts is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment or financial decisions. Appropriate independent advice should be obtained before making any such decision.
No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein.